A World With Oil at $100

From the Wall Street Journal

At the Wall Street Journal this morning is a front page article that pronounces that oil reached $100/barrel yesterday. The article goes to illustrate how the financial markets have changed in the last ten years as oil’s price increased 10-fold;

The surging price of oil, from just over $10 a barrel a decade ago to $100 yesterday, is altering the wealth and influence of nations and industries around the world.

These power shifts will only widen if prices keep climbing, as many analysts predict. Costly oil already is forcing sweeping changes in the airline and auto sectors. It is intensifying the politics of climate change and adding urgency to the search both for fresh sources of crude and for oil alternatives once deemed fringe.
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The long oil-price boom is posing wrenching challenges for the world’s poorest nations, while enriching and emboldening producers in the Middle East, Russia and Venezuela. Their increasing muscle has a flip side: a decline of U.S. clout in many parts of the world.

Steep gasoline prices also threaten America’s long love affair with the automobile, while putting strains on many lower-income people outside big cities, who must spend an increasing share of their budgets just on fuel to get to work.

No one can say for sure whether sky-high oil — part of a price boom in a wide range of commodities, from gold to wheat — is here to stay. But most in the industry agree that a 20-year stretch in which oil was consistently cheap is long gone. The global thirst for oil shows little sign of retreating, and large new discoveries are few. Some in the industry say prices could go far higher; others suspect that speculators — or an economic slump in the U.S. or China — could send prices falling in the near term.

First of all, this “America’s long love affair with the automobile” has long ago passed – back in the 80s when Americans were paying $15,000 for what they tried to convince themselves were luxury cars – but were nothing more than Toyota crap boxes they wouldn’t have twenty-bucks for ten years earlier. America’s love affair is with gadgets in their cars – that’s what car manufacturers are selling these days – watch a car commercial tonight. It’s all about selling voice-recognition MP3 players, DVD players, talking GPS do-hickeys, little buttons that do all of things you could do yourself much easier.

In July 1979, Jimmy Carter promised that Democrats would;

From now on, every new addition to our demand for energy will be met from our own production and our own conservation. The generation-long growth in our dependence on foreign oil will be stopped dead in its tracks right now and then reversed as we move through the 1980’s, for I am tonight setting the further goal of cutting our dependence on foreign oil by one-half by the end of the next decade — a saving of over 4 1/2 million barrels of imported oil per day.

How did Carter promise this goal would be met?

To make absolutely certain that nothing stands in the way of achieving these goals, I will urge Congress to create an energy mobilization board which, like the War Production Board in World War II, will have the responsibility and authority to cut through the redtape, the delays, and the endless roadblocks to completing key energy projects.

We will protect our environment. But when this Nation critically needs a refinery or a pipeline, we will build it.

So what have Democrats done since? Not one oil refinery has been built in the United States since 1977, not one new oil field has been developed. In fact, China and Cuba are exploring and drilling off of our Florida coast. Oil reserves in Alaska remain untouched, oil off the coast of California lies fallow.

George Bush tried to develop oil fields in Alaska five years ago – that oil would be flowing towards our markets this instant, except that Democrats and weak kneed Republicans (many of whom are out of office today) blocked it to save some phantom caribou herds. When energy companies tried to build a wind farm off of Massachusetts’ coast, Jabba the Kennedy and John Kerry blocked the structures so as not to ruin the view from the mansions.

In fact, the Democrats have blocked every meaningful measure to move us away from dependence on foreign energy – except their wasteful “investment” of taxpayer dollars into useless and unproductive “alternate energy” boondoggles. Of course there is no incentive to develop “alternate” sources as long as their stream of free cash into the projects from the government – so the “search” goes on. And Democrats’ promises and posturing continues as well.

But this is an election year – things can change as long as people are willing to accept the truth about Democrats’ intentions.

Jack M at Ace of Spades has the story on the guy who drove the price up – briefly.

Category: Economy, Jimmy Carter, Politics, Society